Acquisition of LCA-Vision Inc

9 Months Ended

Sep. 30, 2014

Acquisition of LCA-Vision Inc [Abstract]

Acquisition of LCA-Vision Inc

Note 2

Acquisition of LCA-Vision Inc.:

On May 12, 2014, PhotoMedex Inc., completed the acquisition of 100% of the shares of LCA-Vision, a previously publicly-traded Delaware corporation.

LCA is a provider of fixed-site laser vision corrections services at its LasikPlus® vision centers. The vision centers provide the staff, facilities, equipment and support services for performing laser vision correction that employs advanced laser technologies to help correct nearsightedness, farsightedness and astigmatism. The vision centers are supported by independent ophthalmologists and credentialed optometrists, as well as other healthcare professionals. Substantially all of LCA’s revenues are derived from the delivery of laser vision correction procedures performed in the vision centers.

The purchase price of LCA-Vision was $106,552 in aggregate consideration, paid in cash (including the full use of the credit facility), consisting of:

Fair value LCA-Vision stock (A)	$	103,896
Fair value of LCA-Vision restricted stock units, including payroll taxes (B)		2,656
Total purchase price	$	106,552

A.	Based on 19,347,554 outstanding shares of LCA-Vision common stock at May 12, 2014.
B.	Based on 476,436 outstanding or deemed to be outstanding restricted stock units of LCA-Vision common stock at May 12, 2014.

The fair value of the assets acquired and liabilities assumed were based on management estimates and values derived from an outside independent appraisal. The Company expects that the allocation will be finalized within twelve months after the merger. Based on the purchase price allocation, the following table summarizes the estimated provisional fair value amounts of the assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents	$	29,042
Current assets, excluding cash and cash equivalents		6,114
Deferred tax asset, current		1,124
Property, plant and equipment		17,269
Identifiable intangible assets		39,050
Other assets		1,518
Total assets acquired at fair value		94,117
Current liabilities		(19,009	)
Long-term debt		(1,603	)
Deferred tax liability, long-term		(9,138	)
Other long-term liabilities		(7,397	)
Total liabilities assumed		(37,147	)
Net assets acquired	$	56,970

The purchase price exceeded the fair value of the net assets acquired by $49,582, which was recorded as goodwill.

The consolidated results of operations do not include any revenues or expenses related to the LCA-Vision business on or prior to May 13, 2014, the consummation date of the acquisition. The Company’s unaudited pro-forma results for the three and nine months ended September 30, 2013 and for the nine months ended September 30, 2014 summarize the combined results of PhotoMedex and LCA-Vision in the following table, assuming the acquisition had occurred on January 1, 2013 and after giving effect to the acquisition adjustments, including amortization of the tangible and definite-lived intangible assets were acquired in the transaction:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)
Net revenues	$	66,549		$	190,479		$	232,743
Net income (loss)		(2,234	)		(31,690	)		10,347
Net income (loss) per share:
Basic	$	(0.11	)	$	(1.69	)	$	0.50
Diluted	$	(0.11	)	$	(1.69	)	$	0.49
Shares used in calculating net income (loss) per share:
Basic		19,982,967			18,722,459			20,518,493
Diluted		20,441,262			18,722,459			20,976,788

These unaudited pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2013, nor to be indicative of future results of operations.